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Announcement regarding the acquisition of a property
SA Corporate Real Estate Fund
("SA Corporate" or "the Fund")
(Incorporated in the Republic of South Africa)
Share Code: SAC ISIN Code: ZAE000083614
A Collective Investment Scheme in property registered in terms of the Collective Investment Schemes
Control Act, No. 45 of 2002 and managed by SA Corporate Real Estate Fund Managers Limited
(Registration number 1994/009895/06) (“SA Corporate Fund Managers”)
ANNOUNCEMENT REGARDING THE ACQUISITION OF A PROPERTY
1. Introduction
SA Corporate unitholders are advised that the Fund has entered into an agreement with Old
Mutual Life Assurance Company (South Africa) Limited (“OMLACSA”), dated 13 December
2012 (“date of signature”), in terms of which SA Corporate will acquire the property known as
the PWC Musgrave Building, consisting of Portion 1 of Erf 2253, Portion 2 of Erf 2253, Portion 9
of Erf 2253, Portion 10 of Erf 2253, Portion 11 of Erf 2253 and the Remainder of Erf 2252 total in
extent approximately 2 178m² held under title deed T57474/2008 and situated at 102 Stephen
Dlamini Road, Durban, KwaZulu-Natal together with the improvements thereon (“the Property”).
The total purchase price for the Property is R65 million (“the Purchase Price“).
The Acquisition will become effective upon transfer of the Property which is expected to take
place during the first quarter of 2013.
2. Rationale for the Acquisition
The Acquisition of the Property is firmly in line with the overall investment strategy of the Fund at
an initial yield on total cost of 10.43% on the assumption that transfer of the Property is
registered on 1 March 2013. The Property comprises a five storey A-Grade office block and is
fully let to PricewaterhouseCoopers on a triple net lease escalating at 8% per annum
compound. The lease expires on 30 June 2015.
The Property is situated next to Musgrave Shopping Centre (in the ownership of SA Corporate)
so the Acquisition is therefore considered strategic. The Musgrave area is one of the suburbs
which form the greater Berea region. The Property is in close proximity to the N3 Freeway via
Essenwood Road. The N3 Freeway offers direct access to the Durban Central Business District.
3. Funding of the Acquisition
The Purchase Price will be settled in cash.
4. Small related party transaction
As SA Corporate and OMLACSA have a common asset manager, Old Mutual Property
(Proprietary) Limited ("OMP") and further, as OMLACSA is an associate of OMP as
contemplated in terms of the JSE Limited (“JSE”) Listings Requirements, the Acquisition is a
“small related party” transaction in terms of the JSE Listings Requirements. SA Corporate have
therefore appointed an external independent valuer, Yield Property Solutions (Proprietary)
Limited, trading as Yield Property Valuers (“the Valuer”), who have valued the Property at an
amount of R65.9 million as at 1 March 2013. The valuation report is available for inspection at
SA Corporate’s registered office for a period of 28 days from the date of this announcement.
Based on the value of the Property arrived at by the Valuer, the directors of SA Corporate Fund
Managers are of the opinion that the terms and conditions of the Acquisition are fair to SA
Corporate unitholders.
5. Conditions precedent
The Acquisition is subject to, inter alia, the following conditions precedent:
- the obtaining of the relevant regulatory approvals, to the extent required; and
- due diligence investigation within 21 business days from date of signature.
6. Property specific information relating to the Property
Property Location Sector Rentable Single or Average Vacancy Annualise Purchase Value of
Area multi rental per by d Price of property
tenanted m2 rentable property property
(1)
area yield
m2 R m2 % Rm Rm
PWC Durban, Offices 4 671 Single, 95.00 zero 10.3 R65.0 R65.9
Musgrave KZN triple net
lease
Notes:
1. The triple net lease expires on 30 June 2015.
2. The value of the Property was arrived at by the Valuer, registered in terms of the Property Valuers Profession
Act, No 47 of 2000, as at 1 March 2013.
7. Pro forma financial effects of the Acquisition and forecast information relating to the
Property
The pro forma financial effects relating to the Acquisition on SA Corporate's net asset value per
share and net tangible asset value per share as at 30 June 2012, being the period relating to SA
Corporate's most recent published results, have not been disclosed as they are not significant.
The forecast property information relating to the Acquisition for the 10 months ending 31
December 2013 and the year ending 31 December 2014 is set out below. The forecast property
information has not been reviewed or reported on by SA Corporate's auditors in terms of Section
8 of the JSE Listings Requirements and is the responsibility of the directors of SA Corporate
Fund Managers.
Description Forecast for the 10 months Forecast for the year ending
ending 31 December 2013 (2) 31 December 2014
R'000 R'000
Net rental incomes (1) 5 637 7 241
Notes:
1. The forecast net rental incomes are fully contracted, for the duration of the forecast periods and reflect the net income
after collection of fee costs, based on the aggregate of contractual net rentals and contractual recoveries.
2. The forecast information for the 10 months ending 31 December 2013 has been calculated from the anticipated date
of transfer of the Property to the Fund, being 1 March 2013.
3. As the consideration for the Acquisition is to be settled in cash, the lease is a triple net lease and the Fund does not
incur tax, the forecast net rental incomes before interest and net rental incomes after taxation are the same as the net
rentals reflected above.
4. The transaction will not be yield dilutionary and due to its size, the impact on earnings available for distribution will not
be significant.
14 December 2012
Cape Town
Investment bank and sponsor
Nedbank Capital
Date: 14/12/2012 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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